Latest / Bloomberg Intelligence / How Bob Inglis Went From Climate Change Denier to Activist

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How Bob Inglis Went From Climate Change Denier to Activist · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim
• 0:08
  Speaker 1: Fox along with my co host Lisa Bramowitz. Each day
• 0:11
  Speaker 1: we bring you the most important, noteworthy, and useful interviews
• 0:15
  Speaker 1: for you and your money, whether you're at the grocery
• 0:17
  Speaker 1: store or the trading floor. Find the Bloomberg p m
• 0:20
  Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com.
• 0:32
  Speaker 1: I'm excited to bring in Bob English. He's an executive
• 0:34
  Speaker 1: director at republic e n dot Org. It's a nonprofit
• 0:38
  Speaker 1: climate change group that he founded. He is also a
• 0:41
  Speaker 1: former South Carolina Republican congressman both in the nineties and
• 0:46
  Speaker 1: the two thousands, and a former climate change denier who
• 0:48
  Speaker 1: has turned into an environmental activist. Bob, thank you so
• 0:51
  Speaker 1: much for joining us on this day when we are
• 0:54
  Speaker 1: going to receive, ostensibly at three pm today New York time,
• 0:57
  Speaker 1: a decision from President Trump and whether or not the
• 1:00
  Speaker 1: US will remain part of the Paris Accord. Bob, I
• 1:04
  Speaker 1: want to get started with the reaction that you faced
• 1:07
  Speaker 1: when you changed your mind and went from being a
• 1:10
  Speaker 1: climate change denier UH to somebody who is actively advocating
• 1:15
  Speaker 1: the need to change practices in order to preserve the environment.
• 1:18
  Speaker 1: Why do you think you got so much pushback from
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  Speaker 1: fellow conservatives. Well, unfortunately, Lisa, that was during the midst
• 1:25
  Speaker 1: of the Great Recession, and so probably not good timing
• 1:28
  Speaker 1: on la part. But but you know, when I came
• 1:32
  Speaker 1: to that conviction that really this is real and something
• 1:34
  Speaker 1: we need to attend to, UM, I had to had
• 1:38
  Speaker 1: to do that. But UM, I think it's a different
• 1:40
  Speaker 1: situation now and numbers of Congress who are conservative, truly conservative,
• 1:46
  Speaker 1: UM can do this more safely than I did it
• 1:49
  Speaker 1: back in the days of the Great Recession, because when
• 1:53
  Speaker 1: you did it, it costs you your seat, no right
• 1:56
  Speaker 1: at that, plus some other heresies that I had committed
• 1:58
  Speaker 1: but against became Republican orthodox at the time. You know,
• 2:02
  Speaker 1: when it tribes under pressure, orthodox he becomes very important.
• 2:06
  Speaker 1: And so because you're circling the wagons to protect this
• 2:10
  Speaker 1: food supply the tribe. Right. But now that the economy
• 2:13
  Speaker 1: is doing better and people are seeing, um, the results
• 2:18
  Speaker 1: of how how how renewables can really feed into the grid, well,
• 2:23
  Speaker 1: how we can repower our lives, how this is really
• 2:26
  Speaker 1: pretty exciting free enterprise opportunity, then then they can they
• 2:32
  Speaker 1: can state it differently and it would be a different
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  Speaker 1: reaction than what I got, Like I said in the
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  Speaker 1: dark days of the Great Recession. Well, you know, I
• 2:40
  Speaker 1: just want to follow up with that because I'm wondering
• 2:42
  Speaker 1: maybe you can offer some insight. I mean if you
• 2:45
  Speaker 1: not you personally, but if one is describing himself as
• 2:48
  Speaker 1: a conservative, why not air on the side of caution
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  Speaker 1: and whether climate change is man made or not, why
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  Speaker 1: not take action in order to mitigate it's deleterious effects.
• 3:01
  Speaker 1: I mean, wouldn't you want to side on the you know,
• 3:04
  Speaker 1: with caution and protect the environment even if it wasn't
• 3:08
  Speaker 1: man made. Oh? Absolutely. In fact, I like to tell
• 3:12
  Speaker 1: audiences sometime here's a fresh twenty bill for anybody who
• 3:16
  Speaker 1: will call their insurance company and cancel your homeowners insurance
• 3:21
  Speaker 1: just for tonight, because I'm pretty sure your housing gonna
• 3:25
  Speaker 1: burn down tonight, and the this twenty dollars it's worth
• 3:30
  Speaker 1: more than the probability of your house burning tonight. Anybody
• 3:34
  Speaker 1: take the offer. You know, nobody can take the offer
• 3:36
  Speaker 1: right because you buy insurance like sexuaries. The George Schultz
• 3:41
  Speaker 1: likes to say against things that you that could be
• 3:45
  Speaker 1: really catastrophic, And the key to it is whether it's
• 3:49
  Speaker 1: affordable insurance. And the reality is, there is a way
• 3:52
  Speaker 1: to make this affordable, to make essentially affordable climate insurance
• 3:57
  Speaker 1: by doing a tax swap, taxing income, putting a tax
• 4:02
  Speaker 1: on carbon dioxide, making it an apply to imports. So
• 4:06
  Speaker 1: the whole world follows American leadership and essentially you buy
• 4:10
  Speaker 1: this insurance policy that that protects us against the downside
• 4:15
  Speaker 1: risk and it is significant of the effects of climate change. Well, Bob,
• 4:20
  Speaker 1: I imagine that you still are in communication with a
• 4:23
  Speaker 1: number of Republican leaders in Congress currently. Are there many
• 4:27
  Speaker 1: others who feel similarly to you at this point, Yeah,
• 4:31
  Speaker 1: and a lot of them are in the process of
• 4:33
  Speaker 1: figuring out can they come out on this, you know,
• 4:36
  Speaker 1: and really it is a little bit like coming out
• 4:39
  Speaker 1: to come out on climates, um and so. But that's
• 4:42
  Speaker 1: that's going to change. Just is this is that other
• 4:44
  Speaker 1: matter change. This is changing. People are realizing that, of
• 4:47
  Speaker 1: course you've got a problem here, and up until now,
• 4:51
  Speaker 1: what conservatives have heard is that's a big government is
• 4:54
  Speaker 1: going to solve it. Once they hear that there's a
• 4:56
  Speaker 1: small government way to do this, then they can they
• 4:59
  Speaker 1: can open to it. Right. Well, but Bob, I think
• 5:02
  Speaker 1: that one of the main criticisms on behalf of conservatives
• 5:05
  Speaker 1: against some of these agreements is that they impede free
• 5:08
  Speaker 1: market activities and that they basically put a thumb on
• 5:11
  Speaker 1: a weight on a scale. Uh, simply on a belief,
• 5:15
  Speaker 1: but not necessarily Uh. With the knowledge of this will
• 5:18
  Speaker 1: definitely make everything better. Yeah. Well actually yeah, if you
• 5:23
  Speaker 1: really believe in free markets, as I do and as
• 5:26
  Speaker 1: we do it republic Ean dot Org, then you want
• 5:29
  Speaker 1: all the cost in on all the fuels and all
• 5:33
  Speaker 1: the subsidies removed, and on that level playing field. We
• 5:38
  Speaker 1: believe that free enterprise can deliver innovation faster than government
• 5:42
  Speaker 1: mandates or fickle tax in centers could ever imagine. And
• 5:46
  Speaker 1: so a true belief in free markets says, okay, all
• 5:51
  Speaker 1: costs in, all subsidies out, and then compete, right, And
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  Speaker 1: so the government's only role is to be the honest
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  Speaker 1: cop on the beat that says that enforces that that
• 6:01
  Speaker 1: level playing field. Indeed, all right, well, thanks very much,
• 6:05
  Speaker 1: Bob English. We look forward to hearing you hearing from
• 6:07
  Speaker 1: you in the future. Bob English is the executive director
• 6:11
  Speaker 1: of republic E n dot Org. It is a nonprofit
• 6:14
  Speaker 1: climate change advocacy group. He's also a former GOP and
• 6:18
  Speaker 1: congressman from South Carolina's fourth congressional district. Well, the Miami Marlins,
• 6:35
  Speaker 1: they didn't necessarily take on the Philadelphia Phillies yesterday in
• 6:39
  Speaker 1: an empty stadium, but it was pretty close. About fIF
• 6:43
  Speaker 1: hundred and ninety fans one thousand, five nine fans were
• 6:48
  Speaker 1: in the stadium at Marlins Park for the afternoon game.
• 6:51
  Speaker 1: So why would anyone want to buy a major League
• 6:54
  Speaker 1: baseball team? Well, here to tell us is Chris Russo.
• 6:56
  Speaker 1: He is the head of the sports practice at Hulhand Loki. Chris,
• 7:00
  Speaker 1: thanks for coming into the studio, Thanks for having me.
• 7:02
  Speaker 1: So tell me about the Marlins, because I mean this,
• 7:04
  Speaker 1: there's been a bidding war for the Marlins. But why
• 7:07
  Speaker 1: a bidding war for team that can can't even draw
• 7:10
  Speaker 1: two thou spectators. Well, there's certainly have been a lot
• 7:13
  Speaker 1: of reports over the past months about potential bids from
• 7:17
  Speaker 1: Derek Jeter and Jeb Bush from Mitt Bromney's son, And
• 7:21
  Speaker 1: part of the appeal is for these professional sports teams,
• 7:24
  Speaker 1: they become pretty good businesses. The rights fees that are
• 7:27
  Speaker 1: being paid by television have grown dramatically, Sponsorship has grown,
• 7:31
  Speaker 1: licensing has grown, and the reality of it is there's
• 7:34
  Speaker 1: a real scarcity of teams available. The Marlins is practically
• 7:37
  Speaker 1: the only team that appears to be available, and there's
• 7:39
  Speaker 1: really only been a couple of deals in the last
• 7:41
  Speaker 1: two years among the four major leagues, So there's really
• 7:43
  Speaker 1: a scarcity factor that drives the interest in some of
• 7:46
  Speaker 1: these clubs. Let's say a team does want to examine
• 7:51
  Speaker 1: the field for a buyer. Do you have a set
• 7:54
  Speaker 1: field of potential buyers out there or is that sort
• 7:58
  Speaker 1: of approaching anyone who has a certain amount of net
• 8:01
  Speaker 1: income or a certain amount of wealth above a certain
• 8:04
  Speaker 1: amount and then they've become a candidate. In recent years,
• 8:07
  Speaker 1: the buyers have tended to be hedge fund owners, UH,
• 8:11
  Speaker 1: technology owners and business people, high net worth individuals, and
• 8:15
  Speaker 1: there's a universe of folks that have either tried to
• 8:18
  Speaker 1: buy previous teams or have expressed public interest that are
• 8:21
  Speaker 1: typically the first ones at bat when a team like
• 8:24
  Speaker 1: this comes up. You need a lot of wealth and
• 8:26
  Speaker 1: and you need a lot of wealth in a relatively
• 8:28
  Speaker 1: few amount of people. So it does kind of limit
• 8:30
  Speaker 1: the field, all right, limiting the field, but there's certainly
• 8:33
  Speaker 1: a lot of people who want to get in on this,
• 8:35
  Speaker 1: at least in terms of being able to stream or
• 8:37
  Speaker 1: broadcast sports. Amazon dot Com, Hulu, Netflix, Twitter, Facebook, Are
• 8:42
  Speaker 1: they going to drive up the prices for everybody else?
• 8:45
  Speaker 1: I believe that those companies again Hulu, as you mentioned Netflix,
• 8:50
  Speaker 1: that aren't currently aggressively in sports may ultimately play a
• 8:53
  Speaker 1: role there. Uh. Amazon recently acquired NFL rights, Twitter had
• 8:58
  Speaker 1: NFL rights last year. Facebook is now streaming baseball games.
• 9:01
  Speaker 1: This is really good news for the sports leagues and
• 9:03
  Speaker 1: organizations because they now have new bidders in the mix
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  Speaker 1: who can drive up the prices. You'll still have some
• 9:08
  Speaker 1: of the traditional media companies involved in wanting to have
• 9:11
  Speaker 1: those game rights, but I think that competition is good
• 9:13
  Speaker 1: for the owners. So how much of your job is
• 9:16
  Speaker 1: facilitating deals with people purchasing major league teams or minor
• 9:20
  Speaker 1: league teams and how much is talking with people in
• 9:23
  Speaker 1: the sports universe about investing their wealth, because you also
• 9:26
  Speaker 1: you do both, right. We we focus on being an
• 9:29
  Speaker 1: advisor on mergers and acquisitions, deals and capital raising, and
• 9:32
  Speaker 1: in my particular case, in the sports space, that includes
• 9:35
  Speaker 1: not only teams, though that includes sports businesses. Last year
• 9:39
  Speaker 1: there were transactions involving companies like Formula one in UFC
• 9:43
  Speaker 1: and liar Field Sports, and we were involved in a
• 9:45
  Speaker 1: deal involving a company called World Golf Tour that was
• 9:48
  Speaker 1: sold to Top Golf. So we advise businesses and potentially
• 9:52
  Speaker 1: teams around sports transactions, really around M and A and
• 9:55
  Speaker 1: capital raising. So you'd probably have a fantastic view into
• 9:59
  Speaker 1: e SP and in some of the woes that we've
• 10:01
  Speaker 1: seen there with the viewership going down, do you see
• 10:04
  Speaker 1: a similar kind of decrease in interest across the various
• 10:08
  Speaker 1: sports businesses that rely on consumers to pay for the
• 10:11
  Speaker 1: consumption of sports. I don't think there's a decrease uh
• 10:14
  Speaker 1: in interest in sports or even paying for sports. I
• 10:17
  Speaker 1: think it's going to be done differently over time. I
• 10:19
  Speaker 1: think consumers are going to pay more directly for the
• 10:21
  Speaker 1: sports they consume through digital outlets, as opposed to necessarily
• 10:25
  Speaker 1: buying big cable bundles that include sports among everything else.
• 10:28
  Speaker 1: So I think the interest in sports is continuing to grow.
• 10:31
  Speaker 1: I think the way sports is being delivered is changing,
• 10:33
  Speaker 1: and it's starting to change pretty rapidly. Is there a
• 10:36
  Speaker 1: particular sport or league that is new that would allow
• 10:41
  Speaker 1: new entrants at lower price points. I'm thinking For example,
• 10:44
  Speaker 1: there's drone racing league. I mean, if you want to
• 10:47
  Speaker 1: race your drone, there's a team I guess, and you
• 10:50
  Speaker 1: can participate. Or even watching other people play video games
• 10:54
  Speaker 1: and get it well, it's hot, right absolutely. I let
• 10:58
  Speaker 1: me think about the the video. Watching people play video
• 11:01
  Speaker 1: games in an arena draws more fans then the Marlins.
• 11:05
  Speaker 1: Drew Less sports, which is what you're referring to, has
• 11:09
  Speaker 1: become a huge phenomenon in terms of the fandom. In
• 11:12
  Speaker 1: terms of streaming, there's a platform called Twitch that Amazon
• 11:15
  Speaker 1: owns enormous usage, and so I think what digital platforms
• 11:18
  Speaker 1: do is they allow the emergence of new sports and properties,
• 11:21
  Speaker 1: whether it is drowne racing, whether it's e sports. There's
• 11:24
  Speaker 1: a company called flow Sports that provides coverage of of
• 11:27
  Speaker 1: some of the you know, lesser of covered sports on
• 11:29
  Speaker 1: TV like wrestling, and and and track and field, and
• 11:32
  Speaker 1: so that offers new opportunities for these sports to reach
• 11:35
  Speaker 1: an audience. So how about the traditional sports do you
• 11:38
  Speaker 1: has your experience shown that the value of some of
• 11:41
  Speaker 1: these Major League Baseball teams or football teams has deteriorated
• 11:45
  Speaker 1: as these other sports come up. I think the value
• 11:48
  Speaker 1: of these teams. The Major League teams continues to rise,
• 11:52
  Speaker 1: in part because they're still benefiting from the large rights
• 11:55
  Speaker 1: fees deals that are still in place from television, and
• 11:57
  Speaker 1: also because of the scarcity value. The question will be
• 12:00
  Speaker 1: over time, do those media whites fees continue to be large,
• 12:03
  Speaker 1: even if they're from different sources, or does that start
• 12:06
  Speaker 1: to level off? But right now, again, there are so
• 12:08
  Speaker 1: few teams available in such demand for them that the
• 12:10
  Speaker 1: pricing continues to rise. Thank you so much for joining us.
• 12:13
  Speaker 1: A truly fascinating area and one that I know that
• 12:16
  Speaker 1: my husband will be asking me a lot about tonight.
• 12:18
  Speaker 1: As I can see you're getting into drone racing. Drone racing,
• 12:21
  Speaker 1: and so what would be the like technical you can
• 12:25
  Speaker 1: sit and use you know, you can you can watch,
• 12:27
  Speaker 1: you can sit all right, Chris Russo, thank you so
• 12:29
  Speaker 1: much for joining us. Chris Russo as head of sports
• 12:31
  Speaker 1: practice at Julihan Loki, which is based in New York,
• 12:34
  Speaker 1: talking to us about mergers and acquisition opportunities within both
• 12:38
  Speaker 1: sports teams and sports businesses. Know him. No, I don't
• 12:42
  Speaker 1: think drone racing. You maybe like shuffle board. What's the board?
• 12:49
  Speaker 1: We get you a ship to play that on anyway,
• 13:00
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  Speaker 1: it out. Learn more at Bloomberg dot com slash lens.
• 13:40
  Speaker 1: It has been a painful year for anybody looking to
• 13:43
  Speaker 1: invest really conservatively, given the fact that gold and silver
• 13:48
  Speaker 1: and some of the safe haven trades have not delivered
• 13:52
  Speaker 1: the results that many were hoping. Michael Cogo is President
• 13:55
  Speaker 1: portfolio manager of the Permanent Portfolio family of funds, which
• 13:59
  Speaker 1: over sees about three billion dollars, and he joins us now. Michael,
• 14:04
  Speaker 1: I was looking at your Permanent portfolio. It's a two
• 14:07
  Speaker 1: point eight billion dollar fund, uh and I was looking
• 14:10
  Speaker 1: at some of the top investments with gold, silver treasuries.
• 14:15
  Speaker 1: These have not been assets that have been as reliable
• 14:17
  Speaker 1: this year. Do you still think that they are a
• 14:20
  Speaker 1: worthwhile Betton? Do you think that we are going to
• 14:23
  Speaker 1: move to a more risk off environment anytime soon? Good morning, Lisa,
• 14:27
  Speaker 1: Thanks for having me. Um. You know, yeah, I think
• 14:29
  Speaker 1: there's always room for diversified investing, and that's what we
• 14:32
  Speaker 1: do in our permanent portfolio. So I wouldn't say gold
• 14:35
  Speaker 1: and silver have had awful years. They you know, they're
• 14:38
  Speaker 1: doing okay there. But but realistically, right now, given the
• 14:43
  Speaker 1: interest rate curve, given corporate earnings, given the likelihood of
• 14:47
  Speaker 1: additional growth, UM kind of a bent towards policy, tax regulation,
• 14:52
  Speaker 1: at least that's what we're all expecting at some point
• 14:54
  Speaker 1: in time. Um, there is a little resistance two stocks
• 14:58
  Speaker 1: continuing to drift up and and so that's what happened.
• 15:01
  Speaker 1: And so while we would advocate a healthy UH investment
• 15:05
  Speaker 1: in stocks as well because that is a growth asset class,
• 15:09
  Speaker 1: we also diversify ourselves among a bunch of other asset
• 15:12
  Speaker 1: classes just in the event that the economy turns to
• 15:15
  Speaker 1: account for multiple scenarios to profit but also protect against
• 15:18
  Speaker 1: downside risk. So I think there's always a good time
• 15:21
  Speaker 1: to be diversified and to hedge your bets even in
• 15:25
  Speaker 1: a positive stock market environment. All right, Michael, I wonder
• 15:28
  Speaker 1: if you could tell us what is the most unloved
• 15:30
  Speaker 1: investment category that you've been presented with over the last quarter.
• 15:35
  Speaker 1: I would say probably energy, UM, materials, and UH and
• 15:40
  Speaker 1: maybe financials from an equity market standpoint. Um, you know,
• 15:45
  Speaker 1: because some of those trades had had a good bump
• 15:48
  Speaker 1: post election on expectations UM of those types of industries outperforming.
• 15:54
  Speaker 1: Yet while the economy is still growing, the economy so
• 15:57
  Speaker 1: far this year sort of continues to look a lot
• 15:59
  Speaker 1: like the last couple of years. And so we don't
• 16:02
  Speaker 1: know where we're gonna end up in Q two. But
• 16:03
  Speaker 1: Q one wasn't great, um, and so you're still looking
• 16:06
  Speaker 1: at this sort of one to two percent kind of
• 16:09
  Speaker 1: annualized GDP growth. I think everybody expects this catalyst through
• 16:14
  Speaker 1: policy and tax and less regulation, and but but to
• 16:18
  Speaker 1: date nothing has been passed, and so you've had incremental
• 16:21
  Speaker 1: gains in that area, and as a result, you haven't
• 16:23
  Speaker 1: had the the economic momentum to get us to high
• 16:27
  Speaker 1: two to three percent GDP. So, as a result, the
• 16:29
  Speaker 1: stocks that would benefit in that environment, the energies, the
• 16:33
  Speaker 1: the you know, the transports, the financials, the industrials. It's
• 16:37
  Speaker 1: been a lot more of a mixed picture in those
• 16:39
  Speaker 1: types of industries, and people have reverted to the you know,
• 16:42
  Speaker 1: the high profile you know, Fang plus five type stocks
• 16:45
  Speaker 1: and and other types of growth names, and that's where
• 16:49
  Speaker 1: a lot of liquidity has gone as well. Michael, I'd
• 16:51
  Speaker 1: love to get your take on some comments that we
• 16:53
  Speaker 1: heard earlier in the show from Leo Groshowski. He's the
• 16:56
  Speaker 1: chief investment officer B and Y Melon Wealth Management, and
• 16:59
  Speaker 1: he was saying that he does think that that the
• 17:02
  Speaker 1: market is still has value the stock market US stock
• 17:06
  Speaker 1: market in particular, he's going into emerging markets. He's basically
• 17:10
  Speaker 1: going for the risk on trade, including technology shares as
• 17:14
  Speaker 1: well as others. I'm wondering, do you agree with that assessment.
• 17:17
  Speaker 1: Do you think that that is the correct bet for
• 17:19
  Speaker 1: somebody generally sort of use that as a guiding principle
• 17:24
  Speaker 1: while making allocations right now? I sure do, and I think,
• 17:27
  Speaker 1: you know, we talked about our permanent portfolio being somewhat
• 17:31
  Speaker 1: conservative and and sort of you know, a downside risk protector,
• 17:34
  Speaker 1: but we also invested to make up for that to
• 17:37
  Speaker 1: provide growth in our portfolio. We tend to invest in growth,
• 17:40
  Speaker 1: high beta, high volatility type stocks to give us give
• 17:43
  Speaker 1: our portfolios some some growth movement. And so I think
• 17:47
  Speaker 1: in the stock market, I believe there's always value UM.
• 17:50
  Speaker 1: And I think where you you look right now, you
• 17:53
  Speaker 1: would look to the areas that have not kept up
• 17:55
  Speaker 1: with the broad market UM. And I think some of
• 17:57
  Speaker 1: the sectors that I mentioned would would probably get you there,
• 18:00
  Speaker 1: and those are the sort of risk on growth oriented names.
• 18:04
  Speaker 1: So I would totally be in line with that way
• 18:06
  Speaker 1: of thinking, and probably our own equity based investments and
• 18:10
  Speaker 1: where we're looking for value would would mirror that type
• 18:13
  Speaker 1: of thinking. Now, you've got to have a strong stomach.
• 18:16
  Speaker 1: That's not where the market has been so far this year,
• 18:18
  Speaker 1: but looking forward, UM, where the values might be going forward, UM,
• 18:23
  Speaker 1: I think that is the way to go. I mean,
• 18:26
  Speaker 1: keep in mind, the last several years, you've had very
• 18:28
  Speaker 1: low cost capital that's been buying stocks and bonds, and
• 18:32
  Speaker 1: as a result, there's definitely some sectors. And keeping mind
• 18:34
  Speaker 1: with low interest rates, you know, people have been searching
• 18:37
  Speaker 1: for yields, So there's definitely some sectors that have gotten
• 18:40
  Speaker 1: richly valued. The the yield equivalence in the stock market,
• 18:43
  Speaker 1: the consumers, UM, you know, those sorts of things that
• 18:47
  Speaker 1: people are still investing in, and UH, from a value standpoint,
• 18:51
  Speaker 1: you probably want to move away from those and into
• 18:53
  Speaker 1: some other things that haven't kept up that the prices
• 18:56
  Speaker 1: are less and have more growth potential going forward the
• 18:59
  Speaker 1: next for years. Well, Michael, let's say that you don't
• 19:02
  Speaker 1: have a strong stomach for any of this, and that
• 19:06
  Speaker 1: you know you perhaps think of actually taking some profits.
• 19:09
  Speaker 1: How can we never hear anybody say, gee, sell a
• 19:12
  Speaker 1: little bit. There's nothing wrong with taking a profit. You're
• 19:15
  Speaker 1: never gonna go broke taking profits. I I agree. I mean,
• 19:20
  Speaker 1: I think in this environment, after an eight plus year
• 19:24
  Speaker 1: bull market in stocks and bonds, that you know, that's
• 19:28
  Speaker 1: not to say that they will correct in and of themselves.
• 19:31
  Speaker 1: I mean, usually it takes more than just somebody saying
• 19:33
  Speaker 1: it's time for correction, UM. And the economic data isn't
• 19:36
  Speaker 1: supporting a recession or anything like that right now, and
• 19:40
  Speaker 1: so you've had UH stocks continue to go up for
• 19:42
  Speaker 1: the reasons I mentioned. Corporate earnings have been good in
• 19:44
  Speaker 1: the last three quarters. UM. But there's never a bad
• 19:48
  Speaker 1: time to take some money off the table. And I mean,
• 19:50
  Speaker 1: I think what we're hearing from our investor base a
• 19:52
  Speaker 1: lot lately has been okay, I still want to make
• 19:55
  Speaker 1: some money in the pocket. I think it has more
• 19:57
  Speaker 1: room to run, or maybe it's getting close to the
• 20:00
  Speaker 1: time that I pull back, But we're starting to hear
• 20:02
  Speaker 1: more people talk about what's coming next, taking some money
• 20:05
  Speaker 1: off the table, putting some some investments in even in
• 20:08
  Speaker 1: something like our fund that that is in stocks only,
• 20:12
  Speaker 1: you know, as a hedge against maybe the fact that
• 20:15
  Speaker 1: the stock market won't go on at this rate forever.
• 20:18
  Speaker 1: So I think it's never a bad time to take
• 20:20
  Speaker 1: money to take profits. UM. Keeping what you earned along
• 20:23
  Speaker 1: the way is as important as making it, and I
• 20:26
  Speaker 1: do think sometimes people forget that. So i'd agree with you, Michael.
• 20:30
  Speaker 1: What's the most contrarian bet. The most contrarian bet right now,
• 20:35
  Speaker 1: I would say would be probably equity investments in energy
• 20:40
  Speaker 1: and materials UM for a lot of the reasons I've
• 20:43
  Speaker 1: given UM, and probably the financials as well. Uh. I
• 20:48
  Speaker 1: think that in the longer term that's where a lot
• 20:51
  Speaker 1: of value is in the stock market. And uh, you know,
• 20:53
  Speaker 1: we certainly have strong investments there UM. But it's it's
• 20:57
  Speaker 1: been tough riding them at the moment um. But again,
• 21:02
  Speaker 1: we we think we tend to think out, you know, two,
• 21:05
  Speaker 1: three or five years out with a lot of our
• 21:07
  Speaker 1: investments and uh and so you know, we do have
• 21:10
  Speaker 1: the strong stomach to wait, to wait the story out
• 21:12
  Speaker 1: and hopefully it it plays out the way we think
• 21:14
  Speaker 1: it will. But yeah, that's the Conturian move right now.
• 21:18
  Speaker 1: You know, we're we're not in a lot of the
• 21:20
  Speaker 1: high profile um fang type of stocks. I think they're
• 21:24
  Speaker 1: all great businesses from a consumer standpoint um, but a
• 21:28
  Speaker 1: lot of them are very pricey. I mean, we do
• 21:30
  Speaker 1: own Facebook, but uh yeah, we gotta I got we
• 21:34
  Speaker 1: gotta leave it there. But I want to thank you
• 21:35
  Speaker 1: very much. Michael Cogino. He is the president and portfolio
• 21:38
  Speaker 1: manager of the Permanent Portfolio family of funds, helping to
• 21:41
  Speaker 1: manage approximately three billion dollars, based in San Francisco. This
• 21:58
  Speaker 1: is Bloomberg Markets on him Fox along with Lisa abrama Witz,
• 22:01
  Speaker 1: and we've been speaking about low stock market volatility. A
• 22:04
  Speaker 1: lot of people are looking for any action in the
• 22:06
  Speaker 1: months of April or may probably didn't get it. Here
• 22:09
  Speaker 1: to tell us more about it is Laura Keller Financial
• 22:12
  Speaker 1: reporter for Bloomberg. Laura, maybe you could just describe has
• 22:16
  Speaker 1: been has this period of time, this May and April
• 22:19
  Speaker 1: time frame, has this been unduly low when it comes
• 22:23
  Speaker 1: to volatility? Oh? Yes, Phim, that very much has been.
• 22:26
  Speaker 1: When we were looking back at the VIX index, which
• 22:29
  Speaker 1: is really the best measure, um what most people use,
• 22:31
  Speaker 1: I mean, it's really near a record low, and it's
• 22:34
  Speaker 1: been that way close to ten points on that VIX index,
• 22:38
  Speaker 1: uh for the last month. So it's really just been
• 22:41
  Speaker 1: quite a period of just not a lot of price changes,
• 22:44
  Speaker 1: and therefore, you know, for a lot of these traders,
• 22:46
  Speaker 1: a lot of these banks and by side to not
• 22:48
  Speaker 1: a lot of trading, you know, Laura, I was struck
• 22:51
  Speaker 1: by the action yesterday. JP Morgan shares for example, down
• 22:54
  Speaker 1: about a little more than two percent yesterday after the
• 22:57
  Speaker 1: news that they and Morgan Stanley and by of America
• 23:00
  Speaker 1: we're going to see substantially lower trading volumes. And I'm wondering,
• 23:04
  Speaker 1: why is this a surprise to markets? I mean, isn't
• 23:07
  Speaker 1: this clearly portrayed in all the data that things are
• 23:10
  Speaker 1: cooling off and that people are kind of slowing down.
• 23:13
  Speaker 1: I don't I don't know if that's quite truly, so
• 23:15
  Speaker 1: I think, you know, in terms of chats, maybe people
• 23:18
  Speaker 1: have some awareness of this. One of the analysts that
• 23:20
  Speaker 1: we spoke to for our story, Gerward Cassidy of RBC,
• 23:23
  Speaker 1: you know, he was saying, yes, you know, investors did
• 23:26
  Speaker 1: expect this quarter to be less fantastic, but probably only
• 23:30
  Speaker 1: about five percent or so down on the trading side
• 23:32
  Speaker 1: of things. And here JP Morgan is telling us Mary
• 23:35
  Speaker 1: and Lake the CFO yesterday, you know it's down about
• 23:38
  Speaker 1: fifteen percent, and Bank of America saying, look, it's probably
• 23:41
  Speaker 1: going to end up between ten and twelve percent down
• 23:44
  Speaker 1: for the quarter. So those are definitely more significant moves
• 23:47
  Speaker 1: than I think many investors had anticipated, even if you know,
• 23:50
  Speaker 1: they themselves understand that their own activity has been muted
• 23:53
  Speaker 1: this quarter, and then also know that banks need volume
• 23:57
  Speaker 1: in order to have good trading for the quarter. Well,
• 24:00
  Speaker 1: you mentioned also in your in your story, which I
• 24:02
  Speaker 1: recommend everyone on Bloomberg dot com, is that when you
• 24:07
  Speaker 1: have this kind of low market volatility, it may be
• 24:10
  Speaker 1: because all of the things that people thought were going
• 24:13
  Speaker 1: to happen didn't happen, such as a victory by the
• 24:17
  Speaker 1: far right in the French presidential elections. But having said that,
• 24:22
  Speaker 1: is no one really prepared for that, you know, out
• 24:25
  Speaker 1: of body, out of mind experience that comes from nowhere,
• 24:29
  Speaker 1: that the could crush your so far pretty stellar returns
• 24:33
  Speaker 1: for the year. You mean, if anything could change coming
• 24:36
  Speaker 1: up in the next that that no one can predict.
• 24:38
  Speaker 1: I mean it's almost as if no one is buying
• 24:40
  Speaker 1: insurance just because nothing has happened in the past. Yeah,
• 24:44
  Speaker 1: it's a little bit that way. When you start to
• 24:46
  Speaker 1: think about ideas and why aren't you putting money to work,
• 24:49
  Speaker 1: I think the better way to look at it is
• 24:51
  Speaker 1: actually more on the side of cash. Many investors that
• 24:53
  Speaker 1: I've talked to you have said, luck, we're going to cash.
• 24:55
  Speaker 1: There was a story a couple weeks back on the
• 24:57
  Speaker 1: Bloomberg terminal talking about different debt investors that have moved
• 25:01
  Speaker 1: that way as well. So once you have that happening
• 25:03
  Speaker 1: and people are pulling back their money, they're not actively
• 25:06
  Speaker 1: going out and buying things. So that's really what we're
• 25:09
  Speaker 1: talking about here. I don't know that it necessarily means
• 25:11
  Speaker 1: that you don't think that there could be something on
• 25:13
  Speaker 1: the horizon that maybe you're positioning for in the future.
• 25:16
  Speaker 1: It just seems like there's no you know, sort of
• 25:19
  Speaker 1: push for that right now, and people are actually pulling
• 25:21
  Speaker 1: back and getting more defensive therefore not trading as much. Laura,
• 25:26
  Speaker 1: Not all trading is the same with respect to profits
• 25:28
  Speaker 1: for the banks, and there's some higher profit, higher margin
• 25:31
  Speaker 1: areas like corporate debt trading or mortgage backed security trading.
• 25:35
  Speaker 1: Usually debt trading is more profitable than equity trading. Do
• 25:37
  Speaker 1: you have a sense of where the heaviest declines in
• 25:41
  Speaker 1: activity are right exactly, he says. You point out electronic
• 25:45
  Speaker 1: trading is really happening in the markets for equities, so
• 25:49
  Speaker 1: as a bank, you just don't get as much fees
• 25:51
  Speaker 1: on that. That is an area actually where marrying Lake said,
• 25:54
  Speaker 1: the bank gpmorgan was doing pretty well. So equities seem like,
• 25:58
  Speaker 1: you know, they might be okay as far as trading
• 26:00
  Speaker 1: volumes and revenues, but the debt side, which again, as
• 26:03
  Speaker 1: you point out, is a lot where a lot of
• 26:05
  Speaker 1: banks make more money more fees. You know, we can
• 26:08
  Speaker 1: see when we look at trades data, which is the
• 26:11
  Speaker 1: UM industry collective for all the different prices and all
• 26:14
  Speaker 1: the trades, that volumes are down. I mean they're not
• 26:17
  Speaker 1: down hugely, but you know five six percent, it can
• 26:20
  Speaker 1: be significant in a quarter, and so far that's what
• 26:22
  Speaker 1: we're seeing for April in May, and then when you
• 26:25
  Speaker 1: take that and extrapolate for the banks, that can be
• 26:28
  Speaker 1: a hefty bit of change for what they're not making
• 26:31
  Speaker 1: on fees on these trades, especially because they've had such
• 26:35
  Speaker 1: a good period of time of bond trading revenues over
• 26:37
  Speaker 1: the past year or so. So this comes sort of
• 26:40
  Speaker 1: a reality check whether this industry really is making a comeback.
• 26:43
  Speaker 1: Laura Keller, thank you so much for joining us. Laura
• 26:46
  Speaker 1: Kelor covers the financial industry for Bloomberg News, and she
• 26:49
  Speaker 1: comes to us from London. Thanks for listening to the
• 26:55
  Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
• 26:58
  Speaker 1: to interviews at Apple Podcast, SoundCloud, or whatever podcast platform
• 27:02
  Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox.
• 27:06
  Speaker 1: I'm on Twitter at Lisa Abramo wits one. Before the podcast,
• 27:10
  Speaker 1: you can always catch us worldwide on Bloomberg Radio.